Changes to the Framework to Enable Verification of Upfront Collection of Margins from Clients in Cash and Derivatives segments

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Date	Issuer	Subject	Topic
01-02-2023	SEBI	Changes to the Framework to Enable Verification of Upfront Collection of Margins from Clients in Cash and Derivatives segments	Cash and Derivates Segment
Highlights of SEBI Circular dated February 01, 2023 Changes to the Framework to Enable Verification of Upfront Collection of Margins from Clients in Cash and Derivatives segments Further to various clarification issued by SEBI on upfront collection of margins from clients in cash and derivatives segments, SEBI has now clarified that EOD margin collection requirement from clients, in derivatives segments (including commodity derivatives), shall also be calculated based on the fixed BOD margin parameters.   SEBI further clarified that the above-mentioned change is only for the purpose of verification of upfront collection of margins from clients and that the margin parameters applicable for collection of margin obligation by Clearing Corporations shall continue to be updated on intra-day and EOD basis, as per the extant provisions.   The details of Circulars and clarifications of SEBI on the subject matter are given below:   Sr# SEBI Circular no. and date Circular contents 1 Circular no. SEBI/HO/MRD2/ DCAP / CIR/P /2020/127 dated July 20, 2020 Prescribed the framework to enable verification of upfront collection of margins from clients in cash and derivatives segments. 2 Circular No. SEBI/HO/ CDMRD /CDMRD _DRM /P/CIR/2021/689 dated December 16, 2021 Modified the aforesaid framework prescribed vide said circular dated July 20, 2020, providing for additional snapshots for commodity derivatives segment. 3 SEBI Circular no. SEBI/ HO/MRD2 / DCAP /P/CIR/2022/60 dated May 10, 2022, Modified the aforesaid framework specifying that the margin requirements to be considered for the intra-day snapshots, in derivatives segments (including commodity derivatives), shall be calculated based on the fixed Beginning of Day (BOD) margin parameters. It was also specified therein that there shall be no change in methodology of determination and collection of End of Day (EOD) margin obligation of the client 4. SEBI Circular no. SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/016 dated February 01, 2023 The EOD margin collection requirement from clients, in derivatives segments (including commodity derivatives), shall also be calculated based on the fixed BOD margin parameters. Further, the said change is only for the purpose of verification of upfront collection of margins from clients and the margin parameters applicable for collection of margin obligation by Clearing Corporations shall continue to be updated on intra-day and EOD basis, as per the extant provisions.   SEBI circulars dated July 20, 2020, December 16, 2021 and May 10, 2022 shall, accordingly, stand modified to the above extent. All other provisions of the said SEBI circulars dated July 20, 2020, December 16, 2021 and May 10, 2022 shall continue to remain applicable.   The provisions of this circular shall come into effect from 3 months from the date of issuance of this circular   SEBI Circular no. SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/016 dated February 01, 2023, is enclosed herewith for your ready reference. In case of any clarification or assistance required in implementation of this circular you may contact Vandana Vania– van...@secmark.in / 9223303460        Kaushik Jethwa – kau...@secmark.in / 9870210171

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